Bank of Cascades expanding

Ilene Aleshire @ialeshire

Saturday

Oct 26, 2013 at 12:01 AM

The Bend-based parent of Bank of the Cascades is acquiring Home Federal Bancorp in a deal valued at $265.7 million. Home Federal, which is based in Idaho, acquired Eugene’s LibertyBank in 2010 when Liberty, saddled with troubled real estate loans, failed.

Cascade CEO Terry Zink said Friday that community banks such as his must grow in order to be relevant and remain competitive.

“Community banks have the same regulatory burdens as the banks that are ‘too big to fail,’?” Zink said. So size matters, because of efficiencies of scale, he said.

“We were a $2.5 billion bank prior to the recession,” Zink said, but shrank during the recession, which hit Bend’s real estate market hard.

With the Home Federal acquisition, Bank of the Cascades would again become a $2.5 billion bank, he said, and the fourth largest community bank in the Northwest.

“In addition, the combination represents an opportunity for Cascade to enter the attractive Eugene market to expand its footprint and services in its home state of Oregon,” according to a written statement from Cascade.

“We believe the banks are culturally compatible, and the combined institution will deliver an expanded product offering and stronger lending capacity,” Zink said.

The deal is expected to close in the first three months of 2014, pending regulatory approvals. Cascade will pay an estimated $120.8 million in cash and 24,309,066 shares of Cascade common stock for the acquisition.

The combined companies will have 56 branches, Zink said, but there may be some branch closures in areas where Bank of the Cascades and Home Federal had nearby branches.

Eugene will not be affected by this, however, because “Cascade has not had a presence in Eugene,” he said. “It’s exciting for us because it’s a brand new market for us.”

Cascade went through a major recapitalization in 2010, selling about $177 million of its shares, or almost 90 percent of its stock, to a small group of outside investors that included private equity funds.

Zink said that Cascade had been interested in growing through acquisitions, but “we needed to make sure we were in the right position, make sure the bank was sound.”

Cascade began actively looking for possible acquisitions at the beginning of this year .

“We think it’s a natural fit for us,” he said.

In addition, Zink said, “It gives us the ability to double our size in markets we’re very familiar with.”

Cascade is interested in continuing to grow through acquisitions, he said, although “We’re not going to announce anything in the immediate future. Our intention was to grow the bank and grow it to a size that will be relevant in the Pacific Northwest.

“It has become a place where, in order to survive you really need to get some size. With the regulatory burdens, I think you will see more of this type of deal. Community banks will have to partner up in ways where they can still be relevant in the communities they serve.”

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